MORTGAGE BANKING ACTIVITIES |
9 Months Ended |
|---|---|
Sep. 30, 2022 | |
| Mortgage Banking Activities [Abstract] | |
| Mortgage Banking Activities |
NOTE 4 – MORTGAGE BANKING ACTIVITIES
The Company’s mortgage
loan pipeline price risk, utilization of warehouse lines to fund secondary
servicing.
Residential Mortgage Loan Production
The Company originates, markets, and services conventional and
conforming fixed rate residential mortgage loans are held for sale in the
residential mortgage loans may be held for investment.
market prices are the primary drivers of origination revenue.
Residential mortgage loan commitments are generally outstanding for 30
commitment to originate a residential mortgage loan to when the closed
commitments are subject to both credit and price risk.
collateral requirements, which are generally accepted by the secondary
fluctuations and is partially managed through forward sales of residential
securities, or TBAs) or mandatory delivery commitments with investors.
The unpaid principal balance of residential mortgage loans held for sale,
mortgage loan commitments and forward contract sales and their related
September 30, 2022
December 31, 2021
Unpaid Principal
Unpaid Principal
(Dollars in Thousands)
Balance/Notional
Fair Value
Balance/Notional
Fair Value
Residential Mortgage Loans Held for Sale
$
50,358
$
50,304
$
50,733
$
52,532
Residential Mortgage Loan Commitments ("IRLCs")
(1)
65,967
1,373
51,883
1,258
Forward Sales Contracts
(2)
19,000
609
48,000
(7)
$
52,286
$
53,783
(1)
Recorded in other assets at fair value
(2)
Recorded in other assets and other liabilities at fair value
At September 30, 2022, the Company had
no
0.1
were on nonaccrual status. At December 31, 2021, the Company had $
0.2
days past due and
no
Mortgage banking revenue was as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(Dollars in Thousands)
2022
2021
2022
2021
Net realized gains on sales of mortgage loans
$
3,287
$
12,132
$
13,222
$
40,089
Net change in unrealized gain on mortgage loans held for sale
(958)
(165)
(1,853)
(1,663)
Net change in the fair value of mortgage loan commitments
439
(806)
116
(3,108)
Net change in the fair value of forward sales contracts
655
540
616
1,358
Pair-Offs on net settlement of forward sales contracts
637
(636)
4,846
2,199
Mortgage servicing rights additions
1,079
205
3,167
845
Net origination fees
1,977
1,013
5,013
2,905
Total mortgage banking
$
7,116
$
12,283
$
25,127
$
42,625
Residential Mortgage Servicing
The Company may retain the right to service residential mortgage loans
others is the primary driver of servicing revenue.
The following represents a summary of mortgage servicing rights.
(Dollars in Thousands)
September 30, 2022
December 31, 2021
Number of residential mortgage loans serviced for others
2,818
2,106
Outstanding principal balance of residential mortgage loans serviced
$
801,046
$
532,967
Weighted average
3.92%
3.59%
Remaining contractual term (in months)
343
317
Conforming conventional loans serviced by the Company are sold to Federal
recourse basis, whereby foreclosure losses are generally the responsibility
serviced by the Company are secured through the Government National
insured against loss by the Federal Housing Administration or partially
September 30, 2022, the servicing portfolio balance consisted of
44
%), GNMA (
6
%), and private
investor (
50
%).
The Company had $
0.8
2.0
September 30, 2022 and December 31, 2021, respectively.
been recorded in other assets and other liabilities, respectively,
and nine months ended September 30, 2022, the Company repurchased
0.3
1.3
from the GNMA pools.
no
t repurchase any delinquent
residential loans currently from the GNMA pools.
$
2.2
intention to modify their terms and include the loans in new GNMA pools.
Activity in the capitalized mortgage servicing rights was as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in Thousands)
2022
2021
2022
2021
Beginning balance
$
5,086
$
3,710
$
3,774
$
3,452
Additions due to loans sold with servicing retained
1,079
205
3,167
845
Deletions and amortization
(470)
(351)
(1,246)
(983)
Valuation
-
-
-
250
Ending balance
$
5,695
$
3,564
$
5,695
$
3,564
The Company did
no
t record any permanent impairment losses on mortgage servicing rights for the
September 30, 2022 and September 30, 2021.
The key unobservable inputs used in determining the fair value of the Company’s
September 30, 2022
December 31, 2021
Minimum
Maximum
Minimum
Maximum
Discount rates
9.50%
12.00%
11.00%
15.00%
Annual prepayment speeds
5.88%
10.71%
11.98%
23.79%
Cost of servicing (per loan)
$
85
$
95
$
60
$
73
Changes in residential mortgage interest rates directly affect
servicing rights.
estimated loan curtailment, anticipated defaults, and other relevant factors.
8.08
% at September 30, 2022 and
15.85
% at December 31, 2021.
Warehouse
The Company has the following warehouse lines of credit and master repurchase
September 30, 2022.
Amounts
(Dollars in Thousands)
Outstanding
$
75
1.00%
to plus
1.00%
, with a floor rate of
3.25%
.
0.5
3,346
$
75
November 2022
.
2.25%
, to
3.25%
.
41,378
Total Warehouse
$
44,724
Warehouse
29.0
million. At September 30, 2022, the Company had residential mortgage
pledged as collateral under the above warehouse lines of credit and master repurchase
covenants which include certain financial requirements, including
assets, and maximum debt to net worth ratio, as defined in the agreements.
covenants at September 30, 2022.
The Company has extended a $
50
51
% owned subsidiary entity.
transactions under this line of credit are eliminated in the Company’s
total short term borrowings noted on the Consolidated Statement of
September 30, 2022 and December 31, 2021 was $
23.3
14.8
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